Correlation Between Reacap Financial and El Ahli
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and El Ahli at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reacap Financial and El Ahli into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reacap Financial Investments and El Ahli Investment, you can compare the effects of market volatilities on Reacap Financial and El Ahli and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reacap Financial with a short position of El Ahli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and El Ahli.
Diversification Opportunities for Reacap Financial and El Ahli
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Reacap and AFDI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and El Ahli Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Ahli Investment and Reacap Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reacap Financial Investments are associated (or correlated) with El Ahli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Ahli Investment has no effect on the direction of Reacap Financial i.e., Reacap Financial and El Ahli go up and down completely randomly.
Pair Corralation between Reacap Financial and El Ahli
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 1.03 times more return on investment than El Ahli. However, Reacap Financial is 1.03 times more volatile than El Ahli Investment. It trades about 0.23 of its potential returns per unit of risk. El Ahli Investment is currently generating about -0.18 per unit of risk. If you would invest 660.00 in Reacap Financial Investments on December 4, 2024 and sell it today you would earn a total of 40.00 from holding Reacap Financial Investments or generate 6.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 94.44% |
Values | Daily Returns |
Reacap Financial Investments vs. El Ahli Investment
Performance |
Timeline |
Reacap Financial Inv |
El Ahli Investment |
Reacap Financial and El Ahli Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reacap Financial and El Ahli
The main advantage of trading using opposite Reacap Financial and El Ahli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, El Ahli can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in El Ahli will offset losses from the drop in El Ahli's long position.Reacap Financial vs. Atlas For Investment | Reacap Financial vs. Mohandes Insurance | Reacap Financial vs. Assiut Islamic Trading | Reacap Financial vs. Egyptian Financial Industrial |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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